By Scott Sumner
One often hears about the Trump administration’s deregulation push. But how real is it? Is the number of regulations rising or falling? One Mercatus Center study found that growth in federal regulations slowed during 2017:
As the saying goes, talk is cheap. What do the numbers—the numerous metrics of the stock and flow of regulation—tell us about the Trump administration’s first year of regulatory reform? For one, the growth of regulation has clearly slowed. During President Trump’s first year, federal regulations grew by about 0.65 percent, less than the growth rate of any other president’s first year in office since our data begin in 1970. This rate of growth is also less than one-third of the long-term annual growth rate for federal regulations, which, from 1970 to 2016, was about 2.1 percent.
Slower growth is a good thing, but it doesn’t represent “deregulation”.
There are many areas where regulation is still increasing:
Under new regulations the Treasury Department put in place Wednesday, foreign investments that result in a non-controlling equity stake in U.S. biotechs would be subject to review by the Committee on Foreign Investment into the United States, or CFIUS. The expanded rules also cover 26 other critical fields, including guided missile technology and nuclear electric power generation. . . .
Broadening CFIUS’ scope could have serious implications for early-stage U.S. biotechs, which have seen an influx of venture money from abroad.
Through the first eight months of 2018, cash from Chinese and other Asian investors made up nearly half of venture capital investments flowing into U.S. biotechs, according to data from Pitchbook cited by Reuters. That figure is up sharply from just two years ago, when Chinese and Asian investment made up a little more than a tenth of deal flow into U.S. biotechs.
Here’s another example:
The Trump administration is using the country’s vast and nearly opaque immigration bureaucracy to constrict the flow of foreign workers into the United States by throwing up new roadblocks to limit legal arrivals.
The government is denying more work visas, asking applicants to provide additional information and delaying approvals more frequently than just a year earlier. Hospitals, hotels, technology companies and other businesses say they are now struggling to fill jobs with the foreign workers they need.
The bill includes a provision to help stop the flow of illicit opioids into the country by mail, especially synthetic fentanyl and its analogs, which are fueling the rise in overdose deaths. The provision was pushed by Senator Rob Portman, Republican of Ohio, whose state has been especially hammered by the opioid epidemic.
It will require the United States Postal Service to start collecting information on international mail shipments, just as private carriers like Fed Ex and DHL already have to do. By the end of this year, the Postal Service will need to provide the name and address of the sender and the contents of the package, as described by the sender, for at least 70 percent of all international packages, including all of those from China. It will have to provide the information on all such shipments by the end of 2020.
The Postal Service could block or destroy shipments for which the information is not provided.
Foreign investment, immigration paperwork and mail delivery. Three very different types of regulation, with one thing in common. The US government seems increasingly suspicious of the rest of the world. Look for the US to continue taking regulatory steps to close itself off from the rest of the world. I expect us to remain much more open than places like Cuba and North Korea, but less so than places like Canada and Australia.
Meanwhile, I’m increasingly suspicious of claims that we are in a deregulatory environment. Environmental regulations have recently been pulled back, but many other types of regulations are clearly increasing.
Slightly off topic. David Henderson has a recent post that quotes Larry Summers as follows:
Suppose China had been fully compliant with every trade and investment rule and had been as open to the world as the most open countries at its income level. China might have grown faster because it reformed more rapidly, or it might have grown more slowly because of reduced subsidies or more foreign competition.
David makes a number of excellent points in response to Summers, but I’d like to add one more. When large, mainstream international organizations try to help struggling developing countries with economic reforms, they generally encourage those countries to reduce subsidies and open their economies to trade. So Summers has it backwards; fewer Chinese subsidies and more openness would have led to faster growth, not slower.